U.S. Airlines Promise to Get More Aggressive Towards Gulf Carrier Rivals

Dennis Schaal, Skift

- Mar 05, 2015 7:30 am

Skift Take

Unless the U.S. government curtails competition from Gulf carriers, U.S. airlines just can’t compete. That is the argument that American’s Scott Kirby is making. It seems ironic coming so soon after a mega-airline merger that was supposed to put the airline on firm competitive footing.

— Dennis Schaal

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U.S. airlines are going to get “a lot more aggressive” about pressing their argument that Gulf carriers such as Emirates, Qatar, and Etihad are competing unfairly by being subsidized by their governments, said American Airlines Group president Scott Kirby.

In fact, American, United and Delta have identified “north of $40 billion” in subsidies that the Gulf carriers have secured and have hired a forensic accountant to identify other such funding, Kirby said.

Kirby spoke at the J.P. Morgan Aviation, Transportation and Industrials Conference in New York City March 3,

Here’s what Kirby said in response to a question from an attendee:

“Since you asked, I will get on my soapbox for a minute and talk about the Middle Eastern carriers …We are going to put out more information on this …”

“It is pretty easy to document that the Middle Eastern carriers have received north of $40 billion in subsidies that we can document and a whole bunch of other [subsidies from] interparty relationships that we can’t document but are probably higher subsidies.”

“And we just want to compete on a level playing field. That’s the American way. That’s the way our laws are meant to operate. We can’t compete with governments. We need to be able to compete on a level playing field. We are going to be a lot more aggressive about that.”

Kirby said “our European partners” haven’t been as aggressive about making an issue of the subsidies but may regret it.

“I think a lot of the data was hard for them [European partners] to get,” Kirby said. “We have hired a forensic accountant to help us go find this data around the world. I think in hindsight they will have wished they had done something similar. It isn’t fair to compete with someone who doesn’t have to make a profit and can be subsidized by their governments.”

American, Delta, and United have been circulating a document in Washington pointing to the subsidies in a bid to blunt the Gulf carriers’ expansion into the U.S. Delta representatives declined to provide any portion of the report to Skift or discuss its contents.

Gulf carriers have rejected the contention that they have received government subsidies and argued that U.S. airlines received subsidies after the 9/11 terrorist attacks, as well as received unfair financial advantages during multiple bankruptcies between 2005 and 2013.

Delta CEO Richard Anderson created a firestorm in February and later apologized after countering: “It’s a great irony to have the UAE from the Arabian Peninsula talk about that, given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula.”

After a remark like that it is hard to see how U.S. carriers will get more aggressive in furthering their arguments but that’s what Kirby said is on the agenda.

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